WASHINGTON, (Reuters) – The Obama administration yesterday said it will not require employers to provide health insurance for their workers until 2015, delaying a key provision of President Barack Obama’s healthcare reform law by a year, to beyond the next election.
The move raised questions about the future of other Obamacare provisions, including the mandate for individuals to obtain health coverage in 2014, and follows widespread complaints from businesses and their lobbyists about reporting requirements for employers with 50 or more full-time workers.
Retailers and other business interests welcomed the change, which analysts said could stymie a main avenue of attack on Obama’s signature domestic policy achievement as campaigning for the 2014 midterm congressional election gets under way later this year.
Republicans called it evidence that Obama’s plan was a failure, while Democrats termed it a demonstration of flexibility. Whether that flexibility opens the door to further changes in the healthcare law is now a matter of debate.
“If this is negotiable, it seems like anything is negotiable,” said Malcolm Slee, a tax lawyer who is working with businesses on healthcare implementation.
Companies would have had to pay the Internal Revenue Service $2,000 for each full-time employee who did not get health coverage, beginning Jan. 1, when the Patient Protection and Affordable Care Act is scheduled to come into full effect.
“This is designed to meet two goals,” Mark Mazur, the Treasury Department’s assistant secretary for tax policy, said in a government blog. “It will allow us to consider ways to simplify the new reporting requirements consistent with the 2010 law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible.”
He said the administration will publish formal guidance describing the changes within the next week.
Trade groups representing retailers and restaurants, among those expected to be hit hardest by the mandate, welcomed the one-year extension.
“We commend the Administration’s wise move,” said National Retail Federation Vice President Neil Trautwein. “This one-year delay will provide employers and businesses more time to update their healthcare coverage without threat of arbitrary punishment.”
Some analysts saw the change as a responsible move to accommodate smaller businesses. It could also help the public education campaign to persuade the uninsured to sign up for coverage.
“It takes away one of the potential sources of criticism and frankly negative stories that were likely to materialize in the fall,” said Larry Levitt of the nonpartisan Kaiser Family Foundation, which tracks healthcare issues.
Republican lawmakers seized on the announcement as evidence the healthcare reform they have repeatedly sought to repeal represents a flawed administration policy.
House of Representatives Speaker John Boehner said the administration should now provide relief to individuals who face a penalty if they do not obtain health coverage by 2014. The so-called individual mandate will begin next year at $95, or 1 percent of taxable household income and rise in phases to $695 per person, with a cap of 2.5 percent of household income, by 2016.
